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Not even just; Wallace resigned on Tuesday and PGRX waited two days to release the news, only after the market closed and again absent any calming language ("not due to any disagreement") or pretext ("to pursue other opportunities"). Sure seems like the industry execs brought in by Avery last summer now are rotating out, just difficult to tell whether they are being shown the door or are jumping ship. It will be interesting to see what happens with Eisler and Marks. Certainly the last-minute cancellation of Apollo's predatory loan-to-own and the concurrent installation of Barber and Dangler suggest that the money has taken control of the company with the intent to immediately maximize the asset as opposed to developing the mine. Problem being that time is not on their side...
OTT news prob not a bummer, filing is to implement just-approved pre-pack that confirms current "stock"holders (traded units actually are equity-debt hybrids whose equity portion is the only part being cancelled) receive 85 percent of the delevered and reorganized company that should emerge as a CLEC cash machine.
PGRX, the action here is pretty disturbing but still no filings of insider or institutional selling, and the strategic timing/takeouts of bids over the past two days seems more designed to depress the stock price than to distribute shares. The entire float has traded just since Jan 1, obviously all at prices above today's new all-time low, which indicates a general cluelessness not to mention easy manipulation. So everyone in the know appears to be holding or accumulating.
Have to believe management's self-inflicted wound would not have been allowed without a viable, superior, Plan B already in place. Taken together, the DD and documentation behind BlackRock, Apollo, Sichuan, the 2011 PEA, the 2012 43-101, and other independent events over the past year must have significantly de-risked the play without question. Worst-case BK scenario, Passport data supports PGRX assets comfortably exceeding current EV even if $2B China agreement proves a sham or falls through.
Only worry is Pres/CEO Avery dismissal/bail and PGRX rights to mineral resource. If the former can be explained and the latter remains intact then even a BK/buyout must command a significantly higher price for equity to satisfy noteholder and initial investors. Meanwhile ANY delay in progress threatens the signed $2B contract that benefits everyone involved. This is the type of trade where brass either makes you or sinks you.
PGRX volume drying up, will break one way or the other on news. Large and inside owners still holding. State permits and private leases require ongoing exploration or development activity to remain in force. There can be no delay in completing the bankable feasibility study in 1H2013, which is needed to gain funds that continue uninterrupted progress toward the late 2015 production target which must be achieved in order to meet required performance under $2B offtake contract that begins in 2016. BIG pressure to get back of track fast no matter what caused last week's coup IMHO.
IMO the only thing that could justify this level is a lack of clear rights to the resource, and what are the chances of that? Even the most unlikely siesmic disruptions such as the take-off deal falls out or proves to be a sham, and/or the PEA is somehow discredited, and/or there is massive dilution here in the pennies, or even a collapse of global potash below $375 wouldn't warrant the current PGRX market cap and enterprise value. The low volume and lack of filings seem to indicate that large holders aren't dumping.
Taken together BlackRock, Apollo, Sichuan, the 2011 PEA, the 2012 43-101, and other independent events over just the past year must have significantly de-risked the play without question. Is there something else happening here besides management just shooting itself in the foot and MM/shorts piling on for an opportunistic takedown??
I misspoke, o/s is 72.5M, float is actually about 2/3 of that. Last dilution was the November equity raise. While PGRX has significant and immediate cash needs it is doubtful that there would be additional dilution at these ridiculous prices. More likely approach is an accommodation from the noteholder/partner that allows PGRX time to quickly clean up mess and secure reasonable new financing against wholly-owned land assets and Chinese purchase contract.
PGRX quite a drop this week on sudden ouster of inept CEO and last-minute termination of dilutive financing agreement, yet fundamentals appear unchanged with probable stock turnaround and tight pinch quickly forming. Shares were $2.88 before $2B purchase contract signed in October and now-cancelled $100M financing announced in November. New CEO is an experienced dealmaker unlikely to be fleeced by Wall Street bankers.
Unless just dumped (no filing yet), BlackRock caught in surprise downdraft with 5.7M shares (8% of float) which were bought far north of $2.00 last summer. Also, two recent offerings raised $15M last August @$2.50 and $25M last November @$1.75, with proceeds from both applied to purchase of land still owned. Only debt is secured by land with PGRX partner and Holbrook puppet-master as sole noteholder (so odds go to renegotiation over BK).
HUGE money, interlocking relationships among all players, and highly secretive prospecting/mining business model virtually guarantees avoidance of legal actions (with their accompanying delays and public filings) at all costs. And while conventional wisdom typically has placed the greater value on PPRTF, recent events in this highly-choreographed space surely must shift the near-term trade to PGRX.
Consider the immovable object of a global monopoly locked in by the Canada consortium, against the unstoppable force of exploding demand from China, and you can easily recognize the catbird seat that the newly accessible U.S. supply with central control over several entities both public and private (state/federal and Indian) enjoys, and the coordinated fashion in which all were set to benefit even before one of the two public stock participants went on a sudden but very temporary 75% off sale.
Really respect AF and Matt's record so not questioning the TA on ALSK but I believe there was some thought of a buyout of ALSK by VZ to leapfrog T's head start in Alaska, and when it gradually became clear VZ would go it alone ALSK tanked on plan B tieup with main competitor GCI as means to survive the new competition.
PLUG is stuck; which way will it go?
YOD
Low float, new buy rating, target $5
http://www.streetinsider.com/New+Coverage/Chardan+Capital+Starts+YOU+On+Demand+Holdings+%28YOD%29+at+Buy/8150299.html
But will current shareholders be allowed to participate in the coming profits? Take a look at Reddy Ice and Arctic Glacier, two other companies where cashflow issues overshadowed an otherwise strong business (see any familiar players?), or even LodgeNet. Private equity is ruthless in taking out such tempting turnarounds without leaving so much as a penny for public shareholders, therefore bottomfeeders must be traders only and always keep an eye on the quick exit.
"School Specialty Inc. noteholders Tuesday blasted the $50 million debtor-in-possession facility proposed by Bayside Capital Inc., alleging the package's roll-up provision, excessive interest and unreasonable milestones are designed for the sole benefit of the private equity firm...The terms attached to DIP financing would force the Wisconsin-based provider of school supplies into an unnecessarily expedited sales process that would end with Bayside rolling up $95 million in prepetition debt ahead of other creditors and acquiring the company at a fire-sale price, according to an objection filed..."
http://www.law360.com/mergersacquisitions/articles/411213/school-specialty-creditors-say-50m-dip-is-for-lender-s-gain
"Indeed, the Debtors’ senior executives stated during their November 20, 2012 earnings call that management believes they can achieve long-term goals at double-digit EBITDA margins and, despite a slight decline in gross revenues, consolidated gross margins improved to more than 39% and net income increased by 59% for the second quarter of fiscal 2013."
"Projected EBITDA for 2013 is approximately $46.4 million. Further, the EBITDA projections for 2014 through 2016 range from $47 million to $59 million...For fiscal year 2013, the implied enterprise value of the Debtors’ enterprise, using reasonable valuation assumptions, is substantially greater than $230 million."
"The proposed Bayside DIP Facility is a transparent attempt by Bayside to seize all control and value from the Debtors at a time when the Debtors need not give up either and cannot meet their burden to prove that they are 'unable to obtain such credit otherwise.'"
http://www.kccllc.net/documents/1310125/1310125130129000000000025.pdf
Value Trap or Equity Value?
Is the hotel room television destined to the same fate as the hotel room telephone? Is LNET equity worth anything? We can’t do anything about what we don’t know, such as who owns LNET debt and at what cost. But there are some things we do know that can be examined for clues to the future value of current LNET equity.
For example, just two weeks ago (on 10/26) LNET experienced its third-highest volume trading day ever, with 10x the usual number of shares traded and the price closing 26% higher than the day before. If there is anything to account for that upward surge I haven’t found it. The official short interest remained at 3.71M on 10/31, down only 250K from 3.95M on 10/15. Maybe the hurricane market closures delayed 10/26 settlements? I haven’t found anything that indicates that.
In addition, one month earlier LNET experienced its 11th and 13th highest volume trading days ever (on 9/28 and 9/27), with shares closing 68% higher after both days. This coincided with a delisting notice and overlapped the last of Mark Cuban’s selling; both presumably negative, not positive, events.
Finally, while it’s true that on 10/19 LNET quietly rescinded the 550,000 restricted shares it had so publicly granted to the new CEO the month before (and what was Battista given to compensate for this $203,500 loss from his recent employment agreement?), equity options for 550,000 shares that were granted at the same time remain in force. So there are very recent inside actions that indicate certain value for current equity. They may be mistaken or even otherwise explained, but they cannot be denied.
It is increasingly easy to manipulate (intentionally or unintentionally) a low-float stock. It may be that speculation has taken the upper hand in the recent share action, interrupted occasionally by informed movements. LNET’s entire float has turned over in just the past 2½ months since 9/4 even though almost 30% of outstanding shares presumably are not participating as the Mittlemen Brothers continue to hold 6.6%, Pecora holds 6.3%, Penn Capital 4.9%, MAST 4.6%, Cuban 3.5%, Matlack 1.9%, and Peterson 1.3%. These seven major holders alone represent about 7.8M shares of equity that should be in the same boat as retail owners. Since MAST, Penn Capital, Cuban, and Pecora all had a hand in placing Matlack on the board, we might interpret that their interests are aligned with equity. Reviewing MAST’s initial 11/23 letter to the board also emphasizes the importance of equity.
So might this third quarter report contain a measure of hardball designed to free up precious cashflow for use in the capital-intensive race to upgrade fast enough to stabilize LNET at a significantly more profitable level? The company’s apparent inability to stem the loss of customers is very worrisome. However, the continued-reliable increase in revenue generated by higher-margin HD rooms seems to suggest a viable business model that LNET is uniquely positioned to capitalize on. And the Envision platform, ad insertion, gaming initiative, and return of new hotel construction all provide proven avenues of growth for years to come. That’s why I’m here, and hopefully that’s what MAST and others are after as well.
By their remaining presence alone (even at relatively insignificant valuations), the major holders above (with the exception of the Mittlemen Brothers who now view their position as a lotto ticket on a Battista turnaround) must believe that LNET represents a decent chance for recurring profit flow in an economic climate where return on investment is increasingly difficult to come by. But does their path include current equity or do the major holders intend to capitalize on this opportunity by capturing LNET through other means?
The only real pressure on LNET comes from the debt. To the extent that current creditors either don't believe or don’t care that the race to profitability can be won, their legitimate demands (as demonstrated by covenants and payment structures) create a self-fulfilling prophesy. Vendors (competitors) such as DirecTV and HBO also may be willing to pile onto LNET with brass-knuckle negotiations for content, as DirecTV did with Viacom last summer. Is there any reason for these creditors to demonstrate flexibility that allows an acceleration instead of slowdown in capex now in order to lock-in increased EBITDA later?
Probably not, which may be why there are gratuitous mentions of bankruptcy, change in control (with no NOLs which arrangement is that ominous warning supposed to reference?), and even a presumptuous reclassification of long-term debt liberally sprinkled throughout the third quarter report. Following a bankruptcy filing MAST would be in control of LNET through Battista and Matlack. Creditors and vendors would lose legal recourse to full payments due, and the majority of LNET’s assets are intangibles or other structures that don’t have much monetization value outside of their current use (established relationships with hotels and Hollywood studios, an installed infrastructure that remains far superior to the closest competition in a high-barrier business, an experienced services group long-employed system wide, innovative technology with targeted application, etc.). So the message to creditors and vendors is “why force the stick”?
On the other hand, LNET cannot continue to violate covenants or receive unpaid programming absent agreements with creditors and vendors, and either or both may be willing to sink LNET for a small loss rather than double-down in the hopes of full payoff later on. So perhaps Miller Buckfire and FTI craft the obvious carrot in the form of an out-of-court restructuring or even a pre-pak (if things get ugly)?
In the greater scheme of things the dollar amounts now are so small that everything will come down to a simple calculation of whether or not LNET is worth the trouble to save and sustain. With creditors and vendors preferring to avoid loss rather than needing immediate cash, and major holders apparently willing to invest in a turnaround, the odds seem to favor a dilution or buyout of current equity.
Either way, adjusting for depreciation/amortization, goodwill, and restructuring costs, current cashflow of course remains ridiculous and yields a DCF calculation that suggests a NPV that is multiples higher than Friday’s close or tomorrow’s wide swings. With the low float and unusually active interest of major holders in this “worthless” penny-ante issue, retail holders should be prepared for a wild ride that ends in payoff or theft.
This can only help. DMOI is the only public company in this space, so anyone (institution or retail) who wants to get in on the action has to buy DMOI shares. Maybe this will push DMOI and The Palms to roll out their partnered product a bit faster, in order to strike while the iron is HOT...
Las Vegas Sands to unveil mobile gambling
Thu May 25, 6:41 PM ET
Las Vegas Sands Corp. said Thursday it will be the first Nevada company to introduce mobile gambling devices at its casinos.
The owner of The Venetian hotel-casino said it would introduce games such as black jack, roulette, poker and slots as early as this year on handheld devices provided by Cantor G & W (Nevada) LP, an affiliate of the financial services company Cantor Fitzgerald.
The company said it would provide the mobile gambling services at The Venetian after a field trial late this year or early next and after receiving regulatory approval. It also plans to introduce the devices at The Palazzo, a $1.8 billion resort scheduled to open next door in late 2007.
In March, the Nevada Gaming Commission approved regulations that enable gambling on mobile devices in any public area of the state's casinos but not in hotel rooms or other places that cannot be supervised.
Cantor managing director Joe Asher said the deal makes the company the Sands' exclusive mobile gambling provider but does not prevent Cantor from making deals elsewhere.
Las Vegas Sands shares rose $3.57, or 5.9 percent, to close at $63.67 on the New York Stock Exchange.
http://www.forbes.com/entrepreneurs/feeds/ap/2006/05/25/ap2774654.html
Nevada panel approves mobile gambling regulations
LAS VEGAS The Nevada Gaming Commission gave its final approval to mobile gambling regulations today.
The decision makes Nevada the first state in the nation to approve use of handheld devices and is the last regulatory hurdle after a law allowing it was passed last year.
The rules say people can play games like bingo and poker. And they can make bets on horse races on handheld devices from public areas of casino resorts, but not hotel rooms.
Several manufacturers are lining up to make the devices, including Cantor G-and-W, Shuffle Master, FortuNet and Diamond I.
Commission chairman Peter Bernhard called the unanimous approval today the end of the beginning of a process that will introduce a new era in gaming.
Most casino operators have said they'll wait and see how the technology unfolds.
Gaming regulators say it will take at least several months to test new equipment and start field trials.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
http://www.kesq.com/Global/story.asp?S=4673945&nav=9qrx
dave, thanks.
davidam1, the audio link you posted on Raging Bull appears to be a three-years-old news item. It also appears that the Artie Bucco's Gourmet Foods line still is licensed to Vita Food Products, Inc. (AMEX: VSF) out of Chicago. What gives?
I pose my question here so as not to give it the exposure it would gain on RB. Thanks for all the good info.
http://www.ragingbull.lycos.com/mboard/boards.cgi?board=IVFH&read=5345
I dunno, pokerdv8. It seems that PBLS never misses an opportunity to state carefully qualified "expected"/"estimated"/"gross" revenue figures while at the same time going out of its way to avoid any hint of how much it spends in order to bank those amounts. The PRs and shareholders' updates always are full of big revenue numbers taken out to the penny, yet no cost information. The company tells us that "we grossed a little over $3,000,000.00" in 2004 but gives no mention of how much it net. Even the 2004 Consolidated Balance Sheet (note: unaudited) shows that about 80 percent of the company’s assets are non-cash items of unverified value (basically the mineral rights to the leased pit and other land/access), and there is no cashflow statement accompanying it to show how much it will cost to realize that value.
Yesterday's PR makes the incredible statement that "total unrealized value of the Company's total estimated oil reserves now exceeds $3.5 Billion USD," and that's less than three months after making their first O&G acquisition. Doesn't it strike anyone as odd that PBLS could enter the O&G sector during its hottest period in over 20 years and be profitable right off the bat? Isn't there even a chance that the naive (yet sincere) management here is getting taken advantage of by experienced oilmen who can spot an easy mark three states away? Get rich quick oil schemes (and those who peddle them) rank right up there with Florida land deals and selling the Brooklyn Bridge. Isn't anyone the least bit curious to know how much has been spent (cash, dilutive shares) for all these paper promises PBLS has accumulated during the unprecedented buying spree of the past 90 or so days?
stushy, don't you think that boasting of revenues without reporting associated costs is worrisome at best and deceptive at worst? As an owner, don't you demand to know how much your company is paying for all the millions in revenues it states it is buying/generating??
neighbordave, how much is it costing PBLS to make those revenues? Do you actually know that they have enough left over (profit) to afford the new office and the new leases, not to mention maintaining a positive bottom line for shareholders? Especially where the leases are concerned, don't you think that statements such as "total unrealized value of the Company's total estimated oil reserves now exceeds $3.5 Billion USD" are a bit misleading in light of the high costs and no guarantees involved in tapping these ESTIMATED reserves?
Of course I am greatly encouraged that yesterday's announced deal is an all-cash transaction. But I still wonder whether management is an easy mark for oil patch veterans or smarter than everyone else in a red-hot area where they have no prior experience.
mac44, you ask, "How to explain up 26%? It's not that complicated really." You're absolutely correct, it's not that complicated at all; up 26% on Tuesday simply brought PBLS back to support levels immediately following a one-day plunge on Monday, and produced no follow-through during the rest of the week. So essentially a ZERO GAIN in value from the PR even though over 50M shares traded. Management may or may not be frustrated at this but current shareholders definitely should be wary, just as duelittle2 was saying at the time. Either someone was getting out in a big way (why???) or the naked shorts and other illegal manipulators have taken hold of PBLS and are about to make shareholders their b**ch.
So, sorry to say, the SP appears to be far from a sure thing despite a buyback and several uncomfortably optimistic PRs. Especially when management uses sudden riches to acquire a new headquarters and plunge into a brand new line of business -- the highly speculative O&G business at all-time highs, no less -- all in under three months time, caution, not blind optimism, remains the prudent course for investors.
On June 16 PBLS announced their intention "to bring the Company into SEC compliance and to become a fully reporting company in accordance with the U.S. Securities Act of 1934 by mid-2006." On August 8 PBLS announced their intention to accelerate the process and "proceed with all possible haste to make our fully reporting status become a reality in the shortest amount of time." The best thing an honest pink sheet management can do is to follow through on such a pledge and devote all company resources toward fulfilling it. Otherwise, a sincere-but-inexperienced-in-public-companies management team leaves their company exposed as a sitting duck to the vicious manipulations of the OTC sharks. This oft-repeated -- though sorely misguided -- attempt to "strike while the iron is hot" and build a public company while remaining vulnerable to ruthless professional SP manipulation only benefits the criminals. Like it or not, ignorance of this simple and sobering fact ALWAYS proves extremely costly to management and honest shareholders alike. Potentially great companies often (usually, even) are destroyed through poor execution.
mac, Power...how do YOU explain today's action?
Locking in profits after yesterday's scare (at last week's prices) doesn't really seem to cover it...
First, these results already are nearly one year old. Second, equity financing doesn't provide any benefit to the financier if the shares are relatively illiquid (so why would anyone accept equity for payment unless they knew it could be easily converted in the near future?). Third, a company must be current in its filings to achieve a listing on a more senior exchange. Fourth, the more recent filings seem to be coming soon (they all would have been prepared at the same time so the bulk of the work probably already has been finished). Finally, back up to $.04 now, a quick double in just the time it took to type this.
ctb, thanks for that listing of 23 BDC stocks which are among the 5,000 or so companies traded on the OTCBB and Pinks. Even as a “partial list” you support my contention that the BDC structure typically is not common among start-up companies. And since none of the 23 are involved in E&P you support my main point that the BDC election is a particularly uncommon route for a public O&G to take. I’m not saying that it is a bad idea, just that AMEP isn’t entirely what it initially appears to be and the confusion may be hurting the SP.
Historically, operating as a BDC has been difficult, which is why there were so few of them around and why the rare successes have gained such publicity. Also, a BDC literally is a closed-end, publicly-traded, investment fund. They are supposed to make sound but helpful investments and to earn profits, which are distributed to shareholders in the form of quarterly dividends or returns of capital. I believe that most people would consider the highly speculative funding of wildcatting activities to be an improper application of the BDC intention, which is why I say you will find that an E&P structured as a BDC is by far the exception rather than the rule. So those looking at AMEP as a BDC may decide to buy stock in a more traditional investment vehicle.
However, as an E&P the BDC structure has given AMEP an additional layer of overhead in a business where overhead generally doesn’t exist. “Many's the slip ‘twixt the cup and the lip;” in other words, because AMEP’s revenue flow isn’t as straightforward as usual there are more opportunities for earnings to disappear before they become booked profits. Most E&Ps consist of an oil guy and a money guy, both working out of their trucks until recurring revenue from those first few strikes begins to come in. With all the additional complications of meeting BDC requirements on top of meeting public stock company requirements, there’s plenty of room for unnecessary waste, inefficiency and fraud. Add in a few business transactions and ongoing financial relationships with family and friends -- not to mention the necessary self-dealing arrangements which any “sole-proprietor” must make in order to cover compensation and expenses -- and you’ve got yourself a suspicious looking package of sweetheart dealings that is offered for sale to the public. For me this is preferable to a pinksheet or other issue which doesn’t report anything to anyone at all, but others who are looking at AMEP as a E&P may decide to gamble on a more traditional O&G company where they can be more certain that revenues earned at the wellhead will translate into profits on the bottom line.
I still like AMEP but I also still want to know why the company is structured as it is and what PROFITS shareholders have earned from all those revenues you keep talking about.
Name 'em ctb (“There are many BDC companies out there by the way”). Or is asking for specifics from a pumper on his own board too mean lol?
http://ragingbull.lycos.com/mboard/boards.cgi?board=AMEP&read=17364
BTW, revenues aren't profits.
ctb, I’m sorry you consider me to be “pretty sour on the whole idea of AMEP as an investment vehicle” because you now are using that to dismiss me as an AMEP detractor even though I took pains to point out my attraction to this stock. I will agree that “skeptical” is a fair characterization, however. Despite what you say, the BDC structure typically is NOT quite common among start-up companies and it is particularly uncommon among O&G start-ups (please name any other O&G BDCs you know of in this market which is currently awash in O&G start-ups). I do prefer to know what I am getting in AMEP as I wish to own shares in E&Ps, not in the financial sector. Small-cap companies in general -- and start-ups of every kind in particular -- tend to be most successful when they concentrate on doing one thing, the thing that they know best. What does Bitters know best? Making a go of it in the public markets is difficult enough without complicating things further through a lack of focus or a muddled message. Perhaps that’s what AMEP is finding out.
So what does Bitters want for and from AMEP other than a steady $13,500/month income? Does he want to build an O&G company or does he want to run an oil sector venture fund? Is he an oilman or a banker? Maybe the BDC was just a means to allow O&G operations to continue in subsidiaries (effectively) without being exposed to the concurrent litigation involving the parent. Who knows? But if Bitters -- the sole employee and officer of AMEP -- intends to establish his start-up as both an O&G company and an investment vehicle then he is likely to fail future shareholders in the same way he has failed past and current shareholders.
ctb, by electing to structure itself as an unusual O&G BDC, AMEP effectively made the decision not to consolidate financial statements with its investees yet not to file individual reports on the investees’ independent operations either. Why did AMEP make this uncommon and glaring effort? The company seems to suggest this was done to maximize its ability to raise capital. However, it also could be seen as an attempt to avoid uncomfortable public disclosures.
As to why the stock price has been moving contrary to AMEP’s apparent value, I don’t yet know; hence my questions. Maybe the BDC election has spooked or at least confused buyers. Perhaps the small float has been used to manipulate the price (although volume and the periodic sharp spikes up dispute this). Of course, the fear is that the stock price in fact HAS been providing an accurate reflection of the company’s shareholder value.
I like AMEP and I want to keep liking it because it still appears to be easy money (I agree with Hawk that most of AMEP’s oil ultimately will be the higher-value light sweet rather than the heavy crude now being sold). But I also want to learn more about the shares and what their trading is trying to reveal. Such a small capitalization on an equally small float usually is either manipulated, locked-up in “strong hands” or not traded at all (no interest). But it doesn’t look like any of those things are happening with AMEP. This company seems to have such great prospects and its shares have been trading in very high daily volumes, yet at $6M AMEP still appears to be grossly undervalued. I just want to discover what I am missing.
Also, I’ve found that as often as not American Bulls is a contrary indicator though sometimes they’re just late to the party.
humbletrader, thanks for chiming in. I’m sure you realize that there are many kinds of oil and just because the WTI futures approached $60 it certainly doesn’t mean that AMEP will be booking that kind of revenue. In fact, in the fourth quarter Production Resources apparently net only $31.20/barrel (which actually is pretty good). We don’t know the average selling price they received -- or much else about the financial basics (revenues and expenditures) of any of the AMEP investees for that matter -- since the company (companies) chooses not to share such information. Still, your point that the benchmark has been hitting new highs for pretty much the past 3 – and certainly the past 1½ – years is a good one. So if the correlation is so obvious, why has AMEP been making new LOWS during the same period? Unless there’s a little bit more to it? Maybe? Ya THINK?
Thanks explorer.
Don’t get defensive Doug, I said I LIKE AMEP. I’m just wondering what’s different now to make anyone think that the share price might behave differently than it has in the past three months, six months, year, two years… Maybe no-one knows.
explorer186 & greeneyedhawk/ctb; I think that there is plenty to like about both AMEP and TNOG, but also nagging questions about each. Explorer, certainly no-one can dispute the impressive and sustained strength of TNOG shares over the past one and two month periods, but are you certain that Midway is spending $75K “out of pocket” to reach TNOG’s wells? This is important because, as you say, that would constitute the only independent endorsement of TNOG’s prospects (not including some truly excellent DD on the boards). The San Antonio Business Journal headlined that Titan HIRED Midway.
http://sanantonio.bizjournals.com/sanantonio/stories/2005/05/23/daily13.html
Hawk & ctb, I agree with your posts, especially that in AMEP one gets “better leases, proven reserves, current and significant revenues from Oil and NG, and at a lower market cap with not as many OS as TNOG.” I think AMEP even owns its own equipment including a servicing rig! Who could ask for anything more? Yet even though all this has been true for quite some time, the company (through its shares) have failed to reflect this apparent value. This is troublesome because it makes AMEP look too good to be true, and even a good DDer may wonder what the market is telling them. Naked shorting -- while a legitimate problem -- is too often also used as an excuse to cover up real trouble. The equity financing is said to be in the past but even then it was done at much higher prices. Even the convert due in 2007 is priced at $1.00. So if the wells have been flowing for months and the leases by themselves are getting more valuable by the day, why hasn’t the share price reflected that? Say what you will, TNOG shares support the TNOG story while AMEP shares undercut the AMEP story.
Don’t get me wrong; as I said, there is plenty to like about both AMEP and TNOG. I just have these specific questions about each which I hope someone can answer as well.
Why is it stupid to talk about profitability? The CEO suggests the possibility of up to $200 million in annual revenues (from a contract signed in September 2003, by the way) but makes no mention of what it will cost and has no record of actually turning a profit. Ultimately the company (and its shares) will be valued based upon how much money it keeps, not how much passes through the books.
OK, thanks. I recall that they were not profitable 14 months ago, at the time they “went public” (backed into a shell, I believe) in order to raise funding to grow operations for the rollout. In fact, I’m pretty sure they’re still very actively soliciting investors (not the public stock kind). I agree with the apparent potential of this company, though, which is why I’m confused and mildly concerned that the possibility they have been unable to make any money may suggest a weakness in their business model. But I also agree that at these levels you place your bets and take your chances. Wish I had taken the opportunity to double-down below 2¢ actually.
This article is nearly a year old yet the company has yet to turn a profit. What are the CURRENT revenue and margin amounts? Why isn't this company making any money NOW, if not on this contract then on its continuing operations over the past six years??
Thanks kxthyag!
travgreg, send me your e-mail!
Art/everyone,
My concerns with IVFH don't lie with the underlying company right now but rather with the manner in which they are treating their public share structure. I mostly agree with Art's "reasons to consider this stock" with the major assumption that DiMaggio's experience and connections provide the company with margins which are high enough to offset the normally challenging profit difficulties faced when dealing with perishable products and by new innovative companies in general. Apparently 75 percent of their clients are “premium white tablecloth restaurants, including hotels, country clubs and casinos" with the rest of the business coming from "mom-and-pops where the average check is $18," a good balance (the most recent customer list I can find includes the Turtle Club at Vanderbilt Beach Resort, Ola' & Chicama, Boone Valley Golf Club, various properties with Starwood Hotels & Resorts Worldwide, Trump International Group, Harrah's Casinos, Marriott Hotels, Wolfgang Puck Properties in Las Vegas and the Four Seasons Hotels & Resorts). The company went national in 2002, said that it had five consecutive months of record sales in the beginning of 2004 and recorded “extraordinary sales growth” for the end of fiscal (calendar) year 2004 as well. They continue to win new customers even while increasing sales to existing customers. They have demonstrated smart business sense in the clever leveraging of their associations with U.S. Food Service (sales) and Harvest Pak Foods (IVFH premium food lines). The U.S. Food Service contract was signed 16 months ago, expanded six months ago and last July IVFH and U.S. Food Service had a joint booth at the American Culinary Federation's National Convention. In August DiMaggio said “As we continue to grow the Food Innovations brand, Chefs are now asking for us by name.” Last month he promised that “in 2005 we will be aggressively seeking new lines to add to our distribution channels and introduce them into our customer and market base. We will be announcing a number of new products in January and February.” I think there is plenty of room for IVFH to grow as a top-tier highly personalized service even in a space dominated by Sysco.
However, nearly one year ago they went public “to aid the company's growth.” Presumably that means that they needed money (but why if they are doing so well?) so they cashed-in public shares which they created by backing into the public shell of a company which had been bought out two years earlier. Yet without any followup since that time they have seen (allowed!) their share price decline, from over $1.00 to under 01¢ on relatively thin volume. I can appreciate that their time and energy should be plowed into the business right now and that they probably are much more interested in running the company than in supporting the stock. That’s great and all for them and their customers but it could spell big trouble for their forgotten shareholders. With the stock now trading so low it undoubtedly has become even more vulnerable to manipulation. The low (practically no) visibility and small float make it a particularly attractive candidate for P&D and boxing campaigns. With only 36% of their shares currently outstanding there is IMHO a high risk of dilution whenever they decide they need more money. Their website is restricted. Their PR company (why contract for PR/IR yet not get any?) doesn’t return calls (not promptly anyway; maybe next week), though maybe they’ve been dismissed as they weren’t listed on the last release. They are not a reporting company, which opens up a whole host of additional risks for public shareholders (no Reg SHO protection, 504 filings, etc) though at .0092 I consider the risks to be reflected in the share price.
I’m betting that the foundation of a profitable and growing company is in place and that the principals now are planning to take the business to the next level. I’m willing to take a chance on their success or failure in doing so but I always worry about the unsophisticated entrepreneurs’ plunge into the public marketplace. Often the professionals eat the public company alive even as the underlying business thrives and escapes unscathed. In other words, the shareholders all too often pay the price for the principals’ education in public financing. Since in just under one year in existence this company’s share price has run inverse to the apparent results of the underlying business, is anyone else worried that that might happen here?
Closed at 0.0092 but I had a buy in for 100,000 shares at 0.01 all day long...
Now I remember where I first heard of this company (12th graph; for board DD only, no implications are intended):
SEC Warns Against Voice-Mail Stock Scam
By Carrie Johnson
The Washington Post
Friday, August 20, 2004
WASHINGTON — It’s just a chatty message, one girlfriend to another, left in your voice mailbox by mistake.
But wait. What’s this?
She’s touting secret information from her “hot stock-exchange” boyfriend about a stock trading at mere pennies that’s destined to hit the roof.
“It’s 50 cents now, and it’s going up to, like, five or six bucks this week, so get as much as you can,” the woman says breezily.
Beware, listener, beware. The Securities and Exchange Commission (SEC) warned Thursday that the gossipy voice mail seemingly gone astray is actually carefully designed “vice mail” designed to trick unwitting investors into buying certain stocks.
Susan Wyderko, director of the SEC’s Office of Investor Education, said regulators have received hundreds of calls about the scheme this week alone.
SEC officials said the stock price and trading volume of the companies mentioned in the messages have risen over the past two weeks, signaling that at least some recipients of the message are acting on the phony tips. The companies focus on different industries and are based around the country. The only thing they appear to have in common is that their shares are thinly traded, changing hands infrequently because there are few buyers and sellers.
At least seven companies have been mentioned in the phone messages, including Donini Inc., Food Innovations Inc., Maui General Store Inc., and Power 3 Medical Products Inc., according to sources briefed on the scheme who spoke on the condition of anonymity because a federal investigation is ongoing.
Delaware Securities Commissioner James Ropp said he got an early alert about the scam when his brother, who received one of the messages, called him a week and a half ago. Ropp described the messages as “very slick ... very believable” and said it was not surprising that some consumers had apparently fallen for the pitch.
Ropp said the companies mentioned in the telephone messages do “not necessarily” have anything to do with the fraud. “They may have no knowledge of this,” he said.
Power 3 Medical, a Woodlands, Texas, biotechnology firm, issued a statement Thursday afternoon saying “the company is not a party to any of these activities, nor approves of them.” It attributed some of the recent volatility in its stock price to the fraud.
Food Innovations is a Naples, Fla., subsidiary of Innovative Food Holdings. The specialty food purveyor is led by Joe DiMaggio Jr., a relative of the late baseball star. Spokeswoman Angeline Cook said DiMaggio is “furious” about the scheme. She said the company is working with the SEC to “get to the bottom of this and find out who is doing this and why.”
The SEC routinely polices “pump-and-dump” stock schemes, designed to fraudulently drive up the price of a stock so the perpetrator can sell at a profit. But answering-machine messages dispensing bogus inside information are a new twist, according to John Stark, chief of the SEC Office of Internet Enforcement.
“This is something that we’ve never seen before,” he said. Thursday’s announcement marks the first time this year that the SEC has issued a formal alert to investors about stock fraud.
The contrived message is carefully casual. “He said it’s cheap now, like 50 cents. Sorry I’m eating, but I’m starving,” the phony friend says with what sounds like a mouthful of food.
Regulators have not identified who is behind the scheme. But in other cases, they have analyzed stock-trading patterns and subpoenaed phone records to track the source of the fraud. SEC officials would not discuss the investigation or confirm its existence Thursday.
Such schemes may violate the anti-fraud statutes and could result in the repayment of any profits generated as a result of the illegal activity, SEC spokesman John Nester said.
SEC officials advised anyone who receives such a message to try to capture the caller’s phone number by using caller identification. The SEC also wants to know the exact time and date of the calls and the names of companies mentioned in the messages. Message recipients can share that information by sending an e-mail to enforcement@sec.gov.
Sometimes advice is worth repeating, even when it’s obvious.
“You should never buy stock on the basis of a hot tip you receive, particularly if it’s from a stranger,” Wyderko said.
“What better spiel than the implication you’ve got some valuable financial information that’s mistakenly passed along?” said Robert Stevenson, author of a book on telephone scams. “It will energize those people who are greedy, who think they will get something for nothing.”
’Vice Mail’ Transcript
The Securities and Exchange Commission released this transcript of a voice-mail message that is spreading as part of what regulators call a new stock scam:
“Hey Tracy, it’s Debbie! I couldn’t find your old number and Tammy said this was your new one — I hope it’s the right one. Anyway, remember Evan, that hot stock exchange guy I’m dating? He gave my dad that stock tip on (stock symbol) and it went from under a buck to like three bucks in two weeks and you were mad I didn’t call you? Well I’m calling you now. This new company is supposed to be like the next Tommy Bahama and they’re making some big news announcement this week. The stock symbol is (stock symbol). He said it’s cheap now, like 50 cents. Sorry I’m eating but I’m starving. It’s 50 cents now and it’s going up to, like, 5 or 6 bucks this week, so get as much as you can. Call me on my cell — I’m still in Orlando. It’s (phone number). Dad and I are buying a bunch tomorrow and I already called Kelly and Ron, too. Anyway, I miss you. Give me a call. Bye.”